23-08-2012

Kinder Morgan and Phillips 66 agree to deliver eagle ford shale crude to coastal refinery

Kinder Morgan Energy Partners, L.P. and Phillips 66 have entered into an agreement for Kinder Morgan to transport  Eagle Ford crude and condensate to Phillips 66’s Sweeny Refinery in Brazoria County, Texas.  Under the agreement, KMP plans to build a 27-mile, 12-inch diameter lateral pipeline to extend its Kinder Morgan Crude Condensate (KMCC) pipeline. Kinder Morgan will provide Phillips 66 with a significant portion of the lateral pipeline’s initial 30,000 barrels per day (bpd) of capacity, which is expandable to 100,000 bpd. 

KMP will invest approximately $90 million in the project, which also involves adding associated receipt facilities by constructing a five-bay truck offloading facility and three new storage tanks with approximately 360,000 barrels of crude/condensate capacity at Kinder Morgan’s DeWitt Station in DeWitt County, Texas, and Wharton Pump Station in Wharton County, Texas.  Pending receipt of environmental and regulatory approvals, construction is scheduled to begin in the fourth quarter of 2012.

 “This pipeline lateral will provide yet another attractive delivery point for customers of our KMCC pipeline while providing Phillips 66 with enhanced access to price advantaged Eagle Ford crude and condensate,” said KMP Products Pipelines President Tom Bannigan.  The project is expected to be immediately accretive to cash available to KMP unitholders upon completion in the first quarter of 2014.

Kinder Morgan’s crude/condensate pipeline, which started service in June 2012, transports crude/condensate from the Eagle Ford shale to the Houston Ship Channel through 65 miles of new-build construction and 113 miles of converted natural gas pipeline. 

“This agreement aligns with a fundamental part of the Phillips 66 business strategy to get advantaged crude to our refineries,” said Glenn Simpson, general manager, Phillips 66 Crude & International Supply.